Ag News for America
Another Nebraska ethanol plant is shutting down.
Ag Processing, Inc. (AGP) announced Friday that it will shut down its 55-million gallon-a-year- plant in Hastings, citing negative margins as a result of high corn prices and lower ethanol prices. It’s the seventh ethanol plant in the state that has shut down.
Brownfield discussed the current ethanol situation with Todd Sneller, administrator of the Nebraska Ethanol Board.
Dennis Conley is a professor of agricultural economics at the University of Nebraska-Lincoln. At the recent Ag at the Crossroads conference in Lincoln, Conley discussed “U.S. Economic Policies, Distillers Grains Exports and the Price of Corn—will there be a second new normal?”
After his presentation, Brownfield visited with Conley about that topic.
The American Coalition for Ethanol (ACE) says China’s decision to drop its anti-dumping case against U.S. distiller’s grains imports is an important victory for the U.S. ethanol industry.
Brian Jennings is the Executive Vice President of ACE. He tells Brownfield Ag News, “China has been one of THE most important destinations for the distillers grain that we make. The fact of the matter is ethanol producers are food and fuel producers and the food product IS distillers grain.”
Jennings says U.S. ethanol producers will make about 40 Million metric tons of DDGS this year.
“China and other countries are important export markets and we never felt as if this probe or this investigation launched by the Chinese government was credible,” Jennings says.
Jennings adds that the Chinese investigation was done at the request of a small group of ethanol producers in China because they didn’t want to have to compete with the DDGS’ that American producers were able to make.
China’s Ministry of Commerce ended the investigation last week after the Chinese companies pulled their petition last month.
The US Grains Council on Friday said the US DDGS imports were not market distorting and in fact helped grow the market in China.
The U.S. Grains Council (USGC) says they’re pleased China’s anti-dumping investigation brought against US DDGs exports has been dropped. The Chinese applicants in the case withdrew their petition on May 10th, 2012.
China’s Ministry of Commerce terminated the investigation this week. Three American ethanol companies were chosen for investigation in December of 2010. Two are based in Iowa — Big River and Golden Grain, the other was United Wisconsin. Golden Grain was later dropped from the investigation.
The USGC says the DDGS exports to China were actually growing the market in China. Mark McConnell is a U.S. Grains Council partner.
He says, “They replaced corn and soybean meal in those rations rather than taking market share away from Chinese producers.”
Tom Dorr, Grains Council President and CEO, says it appears U.S. DDGS exports to China may be on pace to come close to the pre-investigation levels of 2010. He says the market will decide, “The product is actually now somewhat higher than corn. So, it’s hard to say but it’s clear that China has the potential to continue to be a significant market for the product.”
Dorr says it doesn’t appear the Chinese have increased their dry milling production and their demand for higher protein animal products continues to grow.
As a result of the investigation closing, no anti-dumping tariffs will be imposed.
More and more ethanol producers are starting to extract some of the corn oil from their distiller grains. With tight margins, they like the idea of adding an additional salable product to ethanol and distillers grains.
Of course, livestock producers are concerned about how it is going to impact the nutritional value of the DDGs they have come to rely on–and whether the prices they pay for those products will adjust accordingly.
At the recent Iowa Renewable Fuels Summit in Des Moines, the director of ethanol services for the Omaha-based Gavilon Group—Randy Ives—discussed the trend towards corn oil extraction. (Gavilon is one of the largest marketers of distillers grains in the U.S. markets.)
Dr. Steve Loerch, professor in the Animal Sciences Department at the Ohio State University, OARDC was on the program at the recent Buckeye Shepherds Symposium talking about utilizing DDG’s in a small ruminant diet. Dr. Loerch says the inclusion rate, the amount you’re going to feed your animal and cost are two important factors to consider.
Audio: Dr. Steve Loerch, Animal Sciences Dept. Ohio State University (3:00 MP3)
U.S. Grains Council Chairman Wendell Shauman, an Illinois farmer, says they’re pleased U.S. growers will be able to recapture the Colombian market with the recent passage of the free trade agreement – after watching it drift away over the last four years. While the U.S. deal languished, other countries entered into free trade agreements with Colombia.
“We should have that market back,” Shauman say, “Some of us will be going down there to talk to them and try and say, ‘Hey, you know, we really want you as customers. We’re a good supplier for you and please come back.’”
He says implementation of the Colombian FTA, or the others for that matter, won’t be immediate.
“It should be a market that comes back to us reasonably quickly. You know, just geographically, if for no other reason, we’re their closest suppliers. It’s not very far across the Gulf of Mexico to get to Colombia.”
Shauman says the US Grains Council is all about opening up markets to US corn, sorghum, barley and distillers dried grains. The passage of the FTAs with Korea – a big buyer – and Panama – a smaller buyer – he says, will also have a great impact. “You never turn a market down. You’re always trying to open up as many as you can, as many places as you can. One of the things we like to say is when trade works, the world wins.”
Shauman says the Grains Council is also very excited about the expanding market opportunities for U.S. grain exports to China.
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